As the cost of reopening the Zellers stores it acquired last year in Canada continues to mount, Target Corp. is reported to be looking to sell Zellers’ pharmacy files and start fresh with new ­pharmacies.

Target hones Canadian plans

November 28th, 2011

MINNEAPOLIS – As the cost of reopening the Zellers stores it acquired last year in Canada continues to mount, Target Corp. is reported to be looking to sell Zellers’ pharmacy files and start fresh with new ­pharmacies.

According to the Globe and Mail newspaper in Toronto, the discount chain has decided to divest the pharmacy business while it shutters the Zellers stores for six to nine months for remodelling.

Target expects to open the first of its own stores in Canada in 2013. Those stores would be the first to include pharmacies.

Industry observers value the Zellers pharmacy business at up to $500 million, though few expect that Target could get close to that amount in a sale.

Still, the money could help cover some of the $2.9 billion (U.S.) that Target has spent so far for its Canadian start-up.

Analysts say the sale of the Zellers files could attract a lot of interest among Canada’s other pharmacy operators, who are looking to attract new pharmacy customers as generic drug laws in Ontario, Quebec and other provinces slice into their profits.

"Katz will be a buyer," says Andy Giancamilli, chief executive officer of the company that runs the Rexall and Pharma Plus chains. "We will examine each situation."